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posted by martyb on Tuesday December 04 2018, @10:14AM   Printer-friendly
from the the-system-is-broken dept.

In a followup to an article discussed previously here on SoylentNews:

Bloomberg has a three-part series on the use of an obscure legal document that unscrupulous lenders are using against small businesses.

  • In Part 1 - I Hereby Confess Judgement, (the part discussed earlier on SoylentNews,) they go into detail on what the predatory lenders are doing to small businesses using a document known as a "Confession of Judgement" to extract court wins from small businesses without a trial.
  • In Part 2 - The $1.7 Million Man, they go into how a debt collector became NYC's top earning official.
  • In Part 3 - Rubber Stamp Justice, the article describes how the courts are involved, and what some of them are doing to prevent this abuse.

After the story was released on Bloomberg, the New York State Attorney General's office opened a formal investigation last month.


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  • (Score: 1) by khallow on Wednesday December 05 2018, @02:57AM (2 children)

    by khallow (3766) Subscriber Badge on Wednesday December 05 2018, @02:57AM (#769924) Journal

    Nice single data point.

    Not my single data point, let us note! I merely illuminated how in the example given the Pinkertons acquired so much power back then.

    This is clearly not government-sponsored rent-seeking. It's a loophole in the law, one which was not intended for the purpose to which it is being used and which the government is hopefully working to close off in order to protect people.

    To the contrary, there are four ways the government (here the New York state government and its local governments) sponsors this. First, through the loopholes in the law that you already mentioned. It doesn't matter if this is an unintended consequence or not. Second, through the New York City Marshall who is sending these debt collection orders through like a factory and collecting 5%. Finally, there's the court case filers who are automatically processing these claims. They claim it's a money loser for them, but maybe it's not. One mentioned doing eight a day with same day service for $225 a pop. That's $1800 a day.

    Finally, New York state uniquely has the muscle to coerce nationwide banks into giving up their clients. The largest banks all have a strong presence in New York City, the financial capitol of the US, and hence, are vulnerable to New York state government abuse. That's really how one can inflict so much harm on people on the other side of the US. Alabama, for example, couldn't pull that off.

  • (Score: 2) by Mykl on Wednesday December 05 2018, @03:27AM (1 child)

    by Mykl (1112) on Wednesday December 05 2018, @03:27AM (#769936)

    But would a confession of judgement clause be made illegal in a Libertarian utopia? I suspect the attitude would be "if you don't like the terms then don't sign the contract" with no allowance for deception, legalese etc.

    My position is that Libertarians are no better equipped to deal with dodgy contracts (and likely less equipped) than other societies.

    • (Score: 1) by khallow on Wednesday December 05 2018, @04:06AM

      by khallow (3766) Subscriber Badge on Wednesday December 05 2018, @04:06AM (#769951) Journal

      But would a confession of judgement clause be made illegal in a Libertarian utopia?

      Depends. A fair number would disagree that one can sign away rights in a contract. And even of those who do have that opinion, a contract made in bad faith would void that confession of judgment.